• by Nina Lentini  @Nina_Lentini, August 17, 2007

A new study on the attitudes and behaviors of Gen Y consumers toward banking has concluded that marketers of financial services should provide this generation--poised to become more financially powerful than Gen X or Boomers over the next decade--with traditional as well as new, developing methods of banking.

For example, the study by Pleasanton, Calif.-based Javelin Strategy & Research finds that when selecting a new financial services provider, Gen Y consumers ranked access to ATMs and access to branches as more important than online service capabilities, in comparison to those of other age groups.

And it finds that Gen Y is an untapped market for the most part, with bank and credit union marketers focused on "short-term goals of gaining an increased share of wallet from their currently more lucrative consumers."

The study cautions that "not planning for the long-term with respect to Generation Y will leave banks and credit unions in the same position they find themselves in today, fighting for short-term profits."

"Generation Y Banking Behaviors and Attitudes: Expanding the Banking Relationship on Their Terms" studied 2,800 consumers. "Despite the popular belief that Gen Y is primarily focused on alternative channels and technologies, Javelin found that this generation is actually more likely to choose providers and manage their finances through a mixture of traditional and new methods," the company says.

Jean Garascia, study author and research analyst at Javelin, tells Marketing Daily that financial institutions would be better off convincing younger consumers that they can meet their needs rather than simply stating what they offer.

"This group has high expectations, and they expect that their bank will be able to help them save time and manage their finances," Garascia says. "They want what Quicken or Money offers them, but they don't want to do the work. It's all about convenience for them."

Key findings of the study include:

• Gen Y's overall population will exceed that of any other generation by the year 2017, with approximately 91 million Gen Y consumers compared to the 88 million Gen Xers and 77 million Boomers.
• As opposed to most other consumers, security threats are not motivators for Gen Y, and while Javelin data shows that younger consumers are the most likely to suffer fraud compared to any other age group (5.27% versus 3.74% overall), Gen Y fraud victims are significantly less likely than other adults to use basic precautions prior to their information being compromised.
• In the last 12 months 80% of older Gen Y used an ATM for either a deposit or withdrawal, 59% used an automated telephone system to perform a banking transaction, and 90% visited a branch, demonstrating an apparent demand for multichannel availability.